Dominion Minerals Corp. v. The Republic of Panama

Case summary

At a glance

Parties: Dominion Minerals Corp. v. Republic of Panama
Case no.: ICSID Case No. ARB/16/13 (Annulment Proceeding)
Forum and rules: ICSID Convention; ICSID Arbitration Rules (Rules 41(5), 53 and 54)
Treaty: United States–Panama BIT of 27 October 1982, as amended by the Protocol of 1 June 2000
Committee: Toby Landau (President), Loretta Malintoppi, Dyalá Jiménez Figueres
Underlying award(s): Award of 5 November 2020 (President Alfredo Bullard, Alexis Mourre; Charles Poncet dissenting)
Sector: Mining concession
Outcome: Panama's request to stay enforcement was granted without security, and interest stopped accruing from 4 March 2021. Panama's Rule 41(5) objection to Dominion's partial annulment application was dismissed. Costs were reserved.
Amount: Award: USD 14,111,140.80 plus USD 1,861,689.25 in damages, with interest at USD LIBOR + 4%, and 25% of Dominion's legal costs and ICSID advances. Dominion put the current amount of the Award at USD 29,676,554.

The dispute

Dominion Minerals Corp. held a mining concession investment in Panama. In an award of 5 November 2020, a majority of the Tribunal held that Panama breached Articles II and IV of the US–Panama BIT. It found unfair and inequitable treatment and arbitrary measures (acts of ANAM and MICI in 2008 and 2010) and an uncompensated expropriation in 2012. The majority used a sunk-costs approach and awarded about USD 16 million plus interest and 25% of Dominion's costs. Dominion, the award-creditor, applied for partial annulment of the damages and costs parts under Article 52(1)(b), (d) and (e) of the ICSID Convention. It argued that the majority disregarded the full-compensation standard, ignored a valuation based on the Lebovits transaction of 10 July 2008, denied it a hearing on damages for the Article II breaches, gave contradictory reasons, and refused to reimburse its third-party funding costs. Panama asked the Committee to stay enforcement of the Award and to dismiss the annulment application under Rule 41(5) as manifestly without legal merit, arguing that it was a disguised appeal.

Key holdings

Stay granted. The decisive circumstance is that the award-creditor, Dominion, seeks partial annulment of the monetary parts of the Award, while Panama, the debtor, seeks the stay. Requiring Panama to pay amounts that Dominion itself says were assessed on a false basis would be wrong and impractical. ¶¶ 71–79, 94
Dominion should not profit from its own annulment application through further interest. Under the stay, no interest accrues on sums owed under the Award from the date of the Application for Annulment (4 March 2021) until the Committee's final determination. ¶¶ 80–82, 95
The Committee assumed it has power to make a stay conditional on security. It declined to require security here: doing so would give Dominion an unfair advantage arising from its own challenge, and any delay is caused by Dominion. Doubts about Panama's compliance were not decisive, given Panama's clear statements that it would comply. ¶¶ 84–93
Rule 41(5) applies in annulment proceedings through Rule 53. The test stays 'manifestly without legal merit', but at the annulment stage it calls for a higher standard of conviction. It is not limited to the two situations identified in Elsamex v. Honduras (a non-existent ground of annulment, or an attempt to relitigate the merits). ¶¶ 154–159
None of Dominion's grounds is manifestly without legal merit. The right-to-be-heard ground (Art. 52(1)(d)), the failure-to-state-reasons ground (Art. 52(1)(e)) and the failure-to-apply-the-proper-law ground (Art. 52(1)(b)) all raise factual questions that need full examination. These include the Lebovits transaction and the third-party funding costs. ¶¶ 164–167, 173, 186–190
The costs of the stay request and of the Rule 41(5) request are reserved for a later stage of the proceeding. ¶¶ 193–194

Procedural history

29 March 2016Request for Arbitration.
5 November 2020Award: Panama found in breach of Articles II and IV of the BIT and ordered to pay damages and part of Dominion's costs. Charles Poncet dissented.
4 March 2021Dominion files its Application for Partial Annulment. ICSID registers it on 17 March 2021.
25 May 2021ad hoc Committee constituted.
24 June 2021Panama files its request to stay enforcement and its Rule 41(5) objection.
24 November 2021ICSID receives Dominion's advance payment after repeated extensions.
23 February 2022First Session held by video conference. Procedural Order No. 1 follows on 28 February 2022.
21 July 2022Decision: stay granted, Rule 41(5) objection dismissed, costs reserved.